Abolition of Fare Regulation System After 30 Years... 'Brake' Mechanism to Be Established Within 15 Days

Abolition of Telecommunications Fee Approval System... Into History
Eased to 'Provisional Notification System' Allowing Rejection Within 15 Days
Amendment to the Telecommunications Business Act Passed in National Assembly Plenary Session

[Asia Economy Reporter Koo Chae-eun] The telecommunications rate approval system, introduced in 1991, has been abolished after 30 years. Instead, a 'suspensive notification system' allowing rejection within 15 days has been introduced. While retaining a minimum 'brake device' to prevent telecommunications rate hikes, the review period has been minimized to enable the rapid launch of various rate plans.

On the 20th, the amendment to the Telecommunications Business Act, which includes the abolition of the rate approval system, passed the National Assembly's Legislation and Judiciary Committee and the plenary session. The telecommunications rate approval system was introduced to prevent excessive rate hikes or predatory rate cuts by market-dominant operators and to establish an effective competitive market by protecting latecomer operators. Currently, SK Telecom's mobile phone service and KT's local telephone service are subject to the approval system.

However, there has been much criticism that during the approval review period, the rate plan baseline of the top operator is disclosed, and the 2nd and 3rd operators follow it, creating a 'tacit collusion' structure rather than genuine competition. The lengthy approval process also made it difficult for the top operator to quickly launch various rate plans tailored to consumer age or preferences.

Since a bill to abolish the system was proposed in the 19th National Assembly, multiple lawmakers including Park Sun-sook and Byun Jae-il introduced amendments to the Telecommunications Business Act containing the abolition of the rate approval system in the 20th National Assembly. Ultimately, the rate approval system, which had been maintained for about 30 years, disappeared into history as the 20th National Assembly came to a close.

However, recently, seven civic groups held a press conference in front of the National Assembly in Yeouido, urging the withdrawal of the amendment to the Telecommunications Business Act, including the abolition of the rate approval system. These groups argued, "The amendment to the Telecommunications Business Act, which includes the abolition of the rate approval system, is practically a telecommunications rate increase law," and claimed it is "an act that abandons the public nature of mobile communication services used by the majority of the people."

Nevertheless, experts believe that since the amendment includes a suspensive notification system rather than a complete notification system, it can prevent a sudden increase in rates due to the abolition of the approval system. The 'suspensive notification system' included in the amendment reduces procedures to stimulate rate competition while retaining a brake device that allows rejection within 15 days. KT and LG Uplus, the 2nd and 3rd largest operators in the wireless market, are currently subject to the notification system.

A telecommunications industry official explained, "In the US and UK, regulations related to rate plans through price caps were abolished entirely in the early 2000s, leaving it to market autonomy," adding, "Since then, innovative and diverse rate plans such as unlimited data plans and Black Friday plans have been launched. Although it may take time, the abolition of the approval system will allow various rate plans tailored to consumer preferences to be flexibly launched."

This content was produced with the assistance of AI translation services.